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Nanotechnology: The Plastics of the 21 st Century??

November 14, 2006. Nanotechnology: The Plastics of the 21 st Century??. Harrison D. Oellrich Managing Director Worldwide Cyber Technology & Intellectual Property Practice Leader. Agenda. Introduction to Nanotechnology What is nanotechnology? Significance Applications

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Nanotechnology: The Plastics of the 21 st Century??

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  1. November 14, 2006 Nanotechnology:The Plastics of the 21st Century?? Harrison D. Oellrich Managing Director Worldwide Cyber Technology & Intellectual Property Practice Leader

  2. Agenda • Introduction to Nanotechnology • What is nanotechnology? • Significance • Applications • The Associated Risks • Occupational, environmental and consumer • (Re)insurance concerns • The Actuaries Role • What (re)insurers need to know • How you can help your employers achieve their goals • Q & A

  3. An Answer To Many of Our Prayers? • U.N. World Resources 2000 report on the 50 year outlook: • World population ↑ 50 % • World economic activity ↑ 500 % • Global energy and materials consumption ↑ 300 % • “(Nanotechnology) holds the answer to most of our pressing material needs in energy, health, communications, transportation, food, water, et cetera” • Richard Smalley, Professor Rice University, Nobel Laureate • Insurance = Enabler of technologies

  4. The Potential:An Introduction to Nanotechnology

  5. What Is Nanotechnology? • The term ‘nanotechnology’ is derived from the Greek word ‘nanos’ or ‘dwarf’. • 1 millimeter = 1,000,000 nanometer • "Nanotechnology is the understanding and control of matter at dimensions of roughly 1 to 100 nanometers, where unique phenomena enable novel applications." • United State’s National Nanotechnology Initiative (NNI)

  6. Achieving Nanosized Particles • 2 general processes • “Top-down”: Deliberate manipulation of matter by certain chemical and/or physical processes to create materials with specific properties that are not displayed in their larger forms • “Bottom up”: Use of manufacturing processes such as milling or grinding to produce nano sized particles • Nano-sized particles exhibit drastically different or superior properties

  7. The Science Behind the Marvel • As an object decreases in size, the ratio between surface area and volume increases. • Surface molecules are extremely reactive • Classical physics breaks down at 50nm • Objects take on different chemical, biological and physical properties provoking altered optical, magnetic and electrical properties

  8. Four Promising Nano Materials • Buckyballs • Molecules containing carbon atoms bound together in a hollow sphere • Can enter cells as they pass easily through the blood stream • Nano particles • Tiny particles consisting of a single element/compound • Contain properties different from bulk material from which they were derived • Carbon Nano Tubes • Carbon atoms bound in long thin tubes • Enhanced conductivity / strength • Quantum Dots • Nano sized crystals • Emit light after light is shone on them

  9. Key Opportunities and Benefits of Nanotechnology • Economic • 15 % of all global manufacturing output in 2014. • Will add $1 trillion to the world economy by 2015 – Louise Valle, Chubb Corp. • Manufacturing • Miniaturization, intrinsic production, reduction of waste materials • Environment • EPA: potential to reduce worldwide energy consumption by 14.6% • Can eliminate toxic waste at its source • Medicine • Poised to revolutionize the ways that we detect, prevent and treat various diseases and medical conditions. • Research • 2005 NNI R&D spending already nearly $1.1 billion

  10. Irrational Exuberance?? • Even if overstated all must agree that opportunities in this space are real and significant

  11. The Future Is...... • Which products utilize nanotechnology? • Some 200 consumer products presently on the market YES YES YES YES NOW!!!

  12. The Risk:Understanding the exposures and risks from an (re)insurance perspective

  13. Risk Exposures • Occupational • Source: • Manufacturing, transportation, storage, use and discard of particles • Concern: • Lack of protection, monitoring, filtration • Coverage areas: • Workers compensation • This is where the early health and safety concerns will arise: • Researchers • Scientists • Other lab / production workers

  14. Risk Exposures • Environmental • Source: • Widespread applications → water basin, soil, air circulation • Concern: • Complete penetration, concern over new non-biodegradable pollutants • Coverage area: • Environmental liability

  15. Risk Exposures • Consumer • Source: • Skin→ bloodstream, lung→ bloodstream, ingestion, drug administration • Concern: • Penetration of brain membrane, disruption of immune system, unintended flow of particles throughout body, etc.. • Coverage areas: • Product liability

  16. Major (Re)insurance Concerns • Insufficient research, knowledge = major uncertainties • No past data • Unforeseeable future • Unanticipated side effects • The asbestos parallel • Long tail, chronic concerns • Cumulative loss nature • Extremely broad spectrum of application • Revolutionary rather than evolutionary

  17. (Re)insurance – Innovation Connection • Vehicle for bringing safe yet effective innovation to the marketplace • A certain social responsibility involved • Filters new risks and developments to general public • Must stay cutting edge to protect customer • Enabler of technology

  18. The Coverage:Helping Our Employers Achieve Their Goals

  19. What Do (Re)Insurers need to do? • Insurers • Understand the technology and its processes • Understand the risks • Do the research into plausible and critical risks • Begin to formulate products and coverage • Reinsurers • Understand the technology and its processes • Understand the risks • Become comfortable with the industry

  20. Why Should The Insurance Industry Care? • A win–win scenario : • Insurance coverage allows evolution of the technology, all mankind benefits • Establishment of coverage products for nanotechnology, new portfolio of business generated

  21. Why General Exclusions Are Not The Answer • Nanotechnologies cover a very broad field with far from uniform risk characteristics. • Positive diversification effect for insurance portfolios based on variety and spread across industrial segments. • The exposure of the general population to nanotechnologies is still very low.

  22. Risk Awareness • Bring discussion to the front line between insurers and reinsurers • Help determine how underwriters and risk engineers should deal with critical issues • Consult underwriters on unavoidable uncertainties of risks • No reliable probability curve • No reliable severity estimates

  23. Risk Identification Can we underwrite the risks? • Construct clear picture of risk landscape for clients • Develop and evolve contract wording • Creation of new vocabulary and concise definitions • Specify certain exposures • Facilitate research and risk awareness • Aid primary in decisions • Educate reinsurers

  24. Risk Management • It is everyone's responsibility to stay abreast of emerging exposures • Wait and see attitude is strongly unadvised • Close monitoring of risks • Actuaries can/should be an integral component of teams set up to study/monitor/guide their companies response to Nanotechnology (or any other emerging exposure).

  25. THANK YOU!QUESTIONS?

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